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Professional indemnity explained
The SRA Compensation Fund contribution is an annual charge on solicitors and client-money-holding firms that finances discretionary grants to clients who lose money. For 2026/27 the burden shifts sharply from firms to individuals.
Part of: Professional indemnity insurance
In short
From 1 November 2026, the SRA Compensation Fund contribution is £170 per individual solicitor and £2,170 per firm that held or received client money between 1 November 2025 and 31 October 2026, with the Legal Services Board's approval. The split of fund resources moves from 50/50 to 70 percent individual and 30 percent firm. The Fund is a discretionary last resort that sits behind PII, paying grants for dishonesty, failure to account and certain uninsured liabilities, capped at £2 million per grant. Firms should budget, review client money and prepare for renewal.
For the practising year starting 1 November 2026, the SRA has moved more of the cost of the Compensation Fund from firms to individual solicitors. On its current fees page the SRA lists a Compensation Fund contribution of £170 per individual, and £2,170 for every firm that held or received client money between 1 November 2025 and 31 October 2026. The page states that the fees and the contribution have been approved by the Legal Services Board.
The change follows the SRA's response of 16 July 2026 to feedback on its business plan. Fund resources had been raised roughly 50 percent from individuals and 50 percent from firms. The SRA moved to a 70 percent individual and 30 percent firm split, citing the disproportionate impact of rising fees and contributions on smaller firms and the long-term shift towards more solicitors working in fewer firms.
| Contribution | Under the 50/50 model proposed in June 2026 | Final 2026/27 (70/30) |
|---|---|---|
| Individual (practising certificate or registration) | £120 | £170 |
| Firm that held or received client money in the period | £3,600 | £2,170 |
| Split of fund resources | 50% individual, 50% firm | 70% individual, 30% firm |
The June figures come from the Board's draft determinations, which also show reduced, tiered contributions for newly authorised firms that intend to hold client money part way through the year. The SRA says firms employing 29 or fewer solicitors, about two-thirds of firms, would pay less overall in 2026/27 than under the 50/50 model, even if they pay the individual contributions for their solicitors. Larger firms paying for many individuals are more likely to see their total rise.
The firm contribution depends on whether the firm held or received client money in the relevant period, not on turnover. Contributions are collected with authorisation and practising certificate renewal each October.
Who actually pays the individual contribution is a matter for each firm. Many employers pay practising certificate fees and contributions for their solicitors, in which case the firm bears both elements. Sole practitioners whose practice holds client money bear both. Consultants and solicitors working through platform or dispersed models should check their arrangements, because the shift towards individuals makes the individual element a larger share of the total than before.
The Compensation Fund and professional indemnity insurance do different jobs. Your PII, written on the SRA minimum terms and conditions, is the first line of protection for clients who suffer loss through a firm's civil liability. The Fund sits behind it. Under the SRA Compensation Fund Rules:
In practice, the minimum terms already require insurers to respond to many claims involving dishonest staff where the principals were innocent; see the innocent principal carve-back. The Fund mainly picks up losses that insurance does not reach, which is why firm collapses and missing client money drive its cost. Background on the Fund is in the solicitors Compensation Fund explained.
These are labelled examples to show the arithmetic and the interaction with cover.
Under the 70/30 model the firm contribution falls from the £3,600 proposed in June to £2,170, while four individual contributions rise from £120 to £170 each. If the firm pays its solicitors' contributions, its combined Compensation Fund cost is lower than under the June proposal.
A consultancy-style firm moved to a third-party managed account and did not hold or receive client money in the period. It does not pay the firm contribution, but each solicitor still pays the individual contribution. Its PII must still meet the minimum terms.
A firm practises for a period without qualifying insurance and a client suffers a loss that a compliant policy would have covered. The client may apply to the Fund under rule 3.4, subject to its discretion, limits and eligibility rules. The firm and its managers face serious regulatory consequences. See what to do if your PI is not renewed.
Apex arranges PII for SRA-regulated firms; a broker reads every enquiry.
The SRA lists £170 per individual and £2,170 per firm that held or received client money between 1 November 2025 and 31 October 2026. These replace the June 2026 proposals of £120 and £3,600 made under a 50/50 split. The SRA states the contributions have been approved by the Legal Services Board.
The SRA said it was responding to concerns about the disproportionate impact of fee and contribution rises on smaller firms. It also pointed to the long-term trend of more solicitors working in fewer firms, and said moving to a 70 percent individual and 30 percent firm split restores the balance between the two.
The firm contribution applies to firms that held or received client money in the relevant period. A firm that did neither does not pay that element, although its solicitors still pay the individual contribution. Check the SRA's fees guidance for your firm's circumstances before relying on this.
Not as a substitute for insurance. The Fund is discretionary and a last resort. It can make grants where a firm should have had qualifying insurance and did not, or for dishonesty and failure to account, but it may refuse or reduce a grant if the loss can be recovered another way.
Not directly, as the contribution is a regulatory charge. However, insurers look closely at client money controls, fraud risk and firm stability, which are the same issues that drive Fund claims. Strong controls help at renewal, and a broker can present them properly to the market.
Tell us what your business does, your turnover and any claims. A broker reads every enquiry and comes back with options. No fee for a quote. Or call 0117 325 0027.
Get a PI quote Request a callbackApex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales, company number 07014570. This page is general information, not advice on your individual circumstances, and it does not guarantee that cover will be available or on what terms.
